Titan Starts Work on East Kelly RailPort

SAN ANTONIO-With funding slated to close today, Titan Industrial Development is prepping to begin demolition work tomorrow on the first phase to the 350-acre East Kelly RailPort. Meanwhile, the developer has firmed up plans for the balance of its initial ground-leased land and is eyeing the takedown of a 30-acre option.

Don Wittschiebe, development director and partner in Titan's San Antonio division, tells GlobeSt.com that Wachovia Bank is scheduled to close a construction loan for more than $10.5 million. If all goes as planned, the Titan crew will start working the dirt by knocking down four buildings, totaling 131,000 sf, to carve out a development site alongside the Union Pacific tracks for a 360,000-sf tilt-wall structure, which has been half leased to the Houston-based grocer, Fiesta Mart Inc. Four other buildings, with 56,000 sf, will be retooled for Rail Link International Inc. of Laredo, for a transload facility with nearly 2,000 feet of track frontage. It's the first spec space to be built in the inland port, which has direct rail connections to Mexico, Canada, Long Beach, CA, Houston and Corpus Christi.

In recent weeks, Rail Link has added another seven acres to its long-term lease, bumping the total to 20 acres to further stoke the industrial redevelopment plan for East Kelly RailPort, formerly KellyUSA. Titan's development, estimated at $35 million, has been on the drawing board nearly 18 months while the Port Authority of San Antonio and Greater Kelly Development Authority have invested 10 years into the redevelopment initiative of the former 1,886-acre US Air Force base.

Wittschiebe says construction will be in full swing within a couple months, adding Rail Link is ticketed to be "up and running by Sept. 1." Fiesta will get its keys in early 2007. The leasing momentum for space quoted at $3.93 per sf triple net has prospects negotiating for the balance of the 360,000-sf warehouse plus two 350,000-sf structures, each designed with 100,000 sf of temperature-controlled space.

"Could phase two conceivably be under way before phase one is completed, yes" Wittschiebe says. And, he adds, many prospects are looking to lease not only Titan's rail-served space, but get some room in an upcoming air cargo project that dovetails with the authority's 12,000-foot runway extension. The dealmaking climate is such that Titan has opened talks to get more land under its control.

"We are definitely taking a major step in becoming a real player in the inland ports of North America," Wittschiebe says. "We're competing with AllianceTexas and Dallas." And like AllianceTexas, East Kelly RailPort is a foreign trade zone.

The Omaha-based Union Pacific's rail yard is the focal point for now. The Fort Worth-based Burlington Northern Santa Fe, which is in the midst of numerous massive intermodal projects coast to coast, has a separate switch access to the industrial park. The BNSF serves Toyota Corp.'s truck manufacturing plant. "We're hoping both railroads will look at this project as a relief valve so to speak," Wittschiebe says.

The Albuquerque-based Titan had Todd Jarmin with Wachovia Bank in Phoenix arrange the construction financing. Besides Wittschiebe, the San Antonio division includes partners Ron Mills and Barbara Patrick with Dallas-based MacFarlan Real Estate Investment Management at their side as an equity partner.